Bill Summary for Bill Number SB09-233

Date: 05/01/2009

Final
BILL SUMMARY for SB09-233

HOUSE COMMITTEE ON FINANCE

Votes: View-->	Action Taken:
Refer Senate Bill 09-233 to the Committee on Appro	PASS

03:41 PM -- Senate Bill 09-233

Representative Judd presented SB 09-233 for Representative Liston, the prime sponsor of the bill, who was unable to be at the hearing. The bill allows a mixed-use residential property in which less than 25 percent of its square footage is used for nonresidential purposes to be assessed entirely at the residential assessment rate for property tax years 2010 and 2011. Properties in which the portion used for nonresidential purposes exceeds 2,000 square feet are not eligible. Representative Judd indicated that the bill was sponsored by the Joint Select Committee on Job Creation and Economic Growth. He discussed the impacts of the bill on local government property tax revenue and state school finance expenditures.

The committee discussed the bill's provisions that prohibit its implementation until the Governor's Office of Economic Development and International Trade receives $344,000 to offset the estimated increased school finance costs to the state as a result of the bill.

03:48 PM

Representative Judd indicated that he did not know whether local governments were opposed to the bill. Representative Summers thought that collecting property tax revenue due from the nonresidential portion of mixed-use properties was not worth the effort. The committee discussed the federal tax implications for taxpayers that would be affected by the bill.

Representative Judd distributed a statement of support for the bill (Attachment D), a letter of support for Senate Bill 09-233 from Cloud Cover Hats, a small business in Paonia, Colorado (Attachment E), and a record of the Senate's third reading, final vote on the bill (Attachment F). The bill passed the Senate on a 35 - 0 vote.

The following persons testified:

03:51 PM -- Ms. JoAnn Groff, representing the Colorado Division of Property Taxation, discussed how mixed-use residential properties are assessed. She indicated that the sponsors' and the Joint Select Committee on Job Creation and Economic Growth's intent for the bill is to make it easier for small businesses to operate out of a home. She thought it would be difficult to know which types of counties would be most impacted by the bill over time, but that counties that are experiencing less residential properties and gaining more types of other properties would probably be the most affected. She believed that high rise residential buildings that have commercial properties on the bottom floors would likely not be impacted by the bill because their commercial property portion is generally too large to be covered by the bill. She thought that such properties were not intended to qualify under the bill.

The committee discussed the potential new economic activity and increased tax revenue that could result from making it easier to run small businesses out of homes.

04:01 PM

Ms. Groff indicated that it is often difficult for assessors to know whether homes have small businesses being run out of them. She indicated that the bill would more likely affect properties with signage on them indicating that the home provides services, such as accounting services. Representative Gerou thought that there are many professionals doing consulting work from their homes that could benefit from the bill.

The committee continued to discuss how the bill would be implemented and which types of properties the bill would apply to.

04:09 PM -- Ms. Natalie Mullis, Chief Economist, Legislative Council Staff, explained that the requirement that $344,000 be received for the bill to be implemented represented the amount needed to offset the estimated two-year school finance impact of the bill and that local governments would experience a revenue loss.

04:12 PM

Representative Judd concluded the discussion of the bill and indicated that he would vote for the bill, though he was not sure whether he would be voting for it if he were not presenting it for Representative Liston. He stated that he was not sure who the bill would benefit because many small businesses in homes will continue to not be identified by assessors; thus, only a very small number of businesses would benefit.

Representative Judd moved SB 09-233 to the Committee of the Whole with a favorable recommendation. Representative Kefalas seconded. Representative Judd and Representative Kefalas withdrew their motions after it was determined that the bill should be referred to the Committee on Appropriations.


BILL:	SB09-233
TIME:	04:14:48 PM
MOVED:	Judd
MOTION:	Refer Senate Bill 09-233 to the Committee on Appropriations. The motion passed 8 -1.
SECONDED:	Kefalas
		VOTE
	Apuan	Excused
	Benefield	No
	Gerou	Yes
	Kagan	Yes
	Kefalas	Yes
	Lambert	Yes
	Roberts	Excused
	Summers	Yes
	Swalm	Yes
	Frangas	Yes
	Judd	Yes

Final YES: 8 NO: 1 EXC: 2 ABS: 0 FINAL ACTION: PASS